Landowners to profit from revised pact

LANDOWNER groups and provinces will benefit from changes to the Umbrella Benefits Sharing Agreement (UBSA) to counter the effects of low gas prices in the future.
Prime Minister Peter O’Neill said the National Executive Council had approved a discounted option exercise price to enable beneficiaries to raise money to buy shares.
He said through this, they could reap the returns they expected through dividends from their shareholding in Kroton, the company overseeing the State’s interest in the PNG LNG project.
“The original option was granted under the terms of an agreement that was reached between the landowners, provincial governments and the Government in 2009,” O’Neill said.
“This gave an indirect interest in the project at a fixed price, calculated at US$240 million (K760 million) for each indirect one per cent interest in the project. At that time, it was predicted that commodity prices would rise.
“However, over the past two years, the price of oil price has dropped from around US$120 (K380) per barrel to a low of US$26 (K80) per barrel before rising to its present price of around US$50 (K160) per barrel.”
He said even in the current economic conditions, UBSA landowners would be able to exercise their option to acquire shares in Kroton 2 Limited – thanks to the three Cabinet decisions.
“The Government has offered a discount in the price to be paid for the purchase of the shares from US$240 million to US$150 million (K475 million) for the equivalent one per cent indirect interest in the project, bringing the total amount payable to Government to US$640 million (K2.03 billion),” O’Neill said.